In recent weeks we have seen UK listed companies look to equity raises in order to consolidate through the crisis.
In London companies alone almost £600 million has been raised across multiple sectors, as trading environments become tougher, revenues decline, and firms look to equity to ensure they have working capital and a strong balance sheet to take them through the period.
This has led some to question the fairness on existing investors with their holdings becoming increasingly diluted, and some industry bodies calling for an element of protection or preferential treatment for them.
The fact remains, we are dealing with unprecedented, uncertain times, and cash is most certainly king.
However, with even FTSE 100 and 250 companies flocking to raise funds in order to stay afloat, where does this leave SME’s?
Government initiatives are certainly welcomed by the majority of industry leaders, though the speed and even likelihood of widespread implementation has been questioned by some.
One significant factor that we are seeing is increased appetite from private equity funds, family offices and private investors, to innovate in how they will look to invest in companies. There is focus on those companies and sectors that have the fundamentals to succeed in a post lockdown market, with potentially reduced competition and increased market share. The fact that these companies may be looking to take on debt or equity at a more generous level than previous in order to increase working capital, means some very attractive opportunities for investment have arisen.
This is a difficult period for all companies, large and small, and working capital to weather the storm is crucial. However, this creates opportunity for those who are best placed to come out of the other side and flourish, and investors want to be part of this, willing to help now, and benefit long term.
Now is the time to strike, please get in touch today and we can discuss your capital requirements and how the best opportunities to meet them.
Pat McCreesh, Partner, Vantage Corporate